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Economy

Thailand is a middle-income country that has seen remarkable progress in human development in the last twenty years. Thailand now has a Human Development Rating of 0.778. It will achieve most if not all of the global Millennium Development Goals well in advance of 2015. Thailand has reduced poverty from 27% in 1990 to 9.8% in 2002, and the proportion of underweight children has fallen by nearly half. Most children are in school; universal primary school enrolment is likely to be achieved within a few years. Malaria is no longer a problem in most of the country. Annual new HIV infections have been reduced by more than 80% since 1991, the peak of the epidemic. Strides are being made toward gender equality.

Thailand’s success can be attributed to a mixture of astute policy making, strong democratic governance, an industrious population, public investment in social services, advantageous historic and geopolitical circumstances and, not least, economic growth.

This notable progress has not, however, benefited everyone equally. Benefits have accrued faster to those more closely linked to the international economy, for example by jobs in manufacturing for export. Those who remained in the domestic economy, such as small scale farmers, generally received fewer benefits, proportionately. Thailand’s cities have grown faster than its countryside; poverty ┬áis a genuine concern, still widespread in the rural northeast, far north and far south of the country.

Persistent development challenges therefore remain, particularly for certain groups and geographical regions. Ongoing challenges include: higher rates of maternal mortality in the Muslim south; enduring child malnutrition in remote northern hill tribe areas; and unsustainable use of natural resources. Additionally, there are warning signs of a resurgence of HIV/AIDS. Women still have fewer career advancement opportunities and low participation in electoral politics and problems of inequality and domestic violence against women remain a concern. Education reform has been greatly advanced in the last few years, yet gaps remain in terms of quality of education and adaptability to the needs of the economy.

Vulnerable groups such as migrants, rural communities in the far north and south, and indigenous populations are especially hard-hit by external and internal shocks. This was the case with the tsunami disaster of December 2004. In areas affected by the tsunami the long-term consequences of the disaster in terms of poverty, health and education remain to be seen. As this report will go on to show, relief and reconstruction efforts have been rapid and effective; although the loss of homes and livelihoods was devastating and continues to affect many people. North-eastern provinces were affected by drought in early 2005.

A variety of ongoing and new government policies seek to address these problems. The Cabinet’s endorsement of the UN Millennium Development Goals Report is a promising sign, as it transforms the goals into Government policy. This will have an increasing impact on the development agenda in Thailand, which will now integrate into national planning the ambitious national development targets outlined in the MDG “Plus” Agenda.

The National Women’s Development Plan has set ambitious targets to rectify issues such as women’s lower participation in electoral politics.

The government’s 30-baht ‘universal’ health care policy now covers 70% of the population. The programme seeks to provide basic medical services to all Thai people, though it has met with some criticism as to the quality of services. The RTG launched in late 2004 the first phase of the national “Healthy Thailand” strategy which, based on WHO guidelines, seeks to raise public awareness of good health. The initiative defines health broadly as being physical, mental, social and spiritual and is in accordance with HM the King’s “Sufficiency Economy” philosophy.

The government of Prime Minister Thaksin Shinawatra completed its term in 2004 in the context of upcoming national elections. It was re-elected in February 2005 with a strong popular mandate and a considerably strengthened parliamentary position. Therefore a continuation, if not an intensification, of established policy patterns and directions is expected.

Overall, despite strong efforts and progress, disparity remains a significant and worrisome characteristic of Thailand’s development situation. While Thailand succeeds well on macro-economic and overall MDG measures, certain regions, groups and pockets of society have been left behind or remain acutely vulnerable. Issues of equality in income, social protection and access to services are significant human development concerns.

Tackling these disparities remains the focus of the UN system’s support to national development policies.

Macro-economic progress

Key indicators for 2004 and 2005 confirmed the Thai economy’s strong recovery from the 1997 financial crisis and its resilience to such shocks as the Avian Influenza outbreaks and the tsunami disaster. However a slow down has been registered in 2005, with an estimated economic growth of 4.2%, but GDP is expected to peak again at around 5% in 2006 (World Bank).

The biggest drag on growth is the significant increase (up to 40% in 2005 compared to 2003) in domestic diesel/gasoline prices which are also expected to push inflation up as high as 4.5% in 2005. Pressure also came from the tsunami, drought, unrest in the south, and avian influenza outbreaks,

These shocks, combined with the rise in inflation, have brought about a reduction in consumer investment confidence and consumption. Household debt was on the rise in 2004, with a 15% year-on-year increase in consumer credit. The World Bank has noted that debt increases the vulnerability of the lowest income earners (such as farm workers and labourers) to interest rate shocks and income decline.

The Thai economy has nonetheless proved resilient, overcoming ongoing shocks thanks to strong growth, an improved fiscal position and high external reserves. Relatively low interest rates and continued growth in imports and exports have also cushioned the impact of adverse factors.

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